Loans Guide

Business Vehicle & Equipment Finance

Looking to finance your business vehicle or equipment? We provide a wide range of business vehicle and equipment finance options.

Introduction to

Comprehensive Guide to Business Vehicle and Equipment Finance in Australia

Equipment is a critical component for the growth and success of your business. However, large-scale purchases can strain your finances and disrupt everyday operations. This is where equipment and vehicle finance solutions come into play. By providing the funds necessary to acquire essential machinery and vehicles, these financial products ensure you can maintain cash flow and continue developing your business without costly interruptions.

If you need to secure funds to purchase equipment or vehicles, contact us today to discuss your options.

Types of Equipment and Vehicle Loans

Chattel Mortgage

Under a chattel mortgage, the equipment or vehicle belongs to your business from the start. The lender uses the equipment as collateral, having a ‘charge’ over it until all repayments are completed. A significant advantage is the ability to claim the GST on the purchase during your next BAS claim.

Commercial Hire Purchase

In this arrangement, the lender initially owns the equipment, and with each repayment, your equity increases until you become the owner once the final payment is made. This method allows other assets to remain free for alternative financing needs.

Finance Leases

The lender retains ownership of the equipment, and you lease it from them. This option frees you from ownership responsibilities and the need for upfront payments, which can significantly benefit cash flow.

Novated Leases

This lease involves a three-way agreement between the employee, employer, and finance business. The employee leases a vehicle from the finance company, and the employer takes on the lease responsibilities, offering flexibility and convenience for both parties.

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What is Equipment and Vehicle Finance?

Equipment and vehicle finance provides businesses with the capital to purchase necessary and specialized equipment for operations. Whether you’re acquiring dental equipment for a private practice or a dump truck for a construction company, this type of finance is essential for various industries. Offered by banks and various lenders, equipment finance solutions come in multiple forms tailored to your financial situation, tax requirements, and budget, ensuring your business can grow and thrive.

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Benefits of Equipment and Vehicle Finance

Interest Rates and Fees

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Qualifying Criteria

Most businesses, including startups and those with unstable credit, can qualify for equipment and vehicle finance. Numerous prequalification tools online can help you determine your eligibility. The criteria may include:

  • Business ABN
  • GST registration
  • Satisfactory annual cash flow levels

What Can Be Financed?

  • Vehicles: Cars, vans, utilities, trucks, trailers, and buses.
  • Equipment: Agricultural machinery, construction equipment, office technology, computer systems, and more.
  • The general criteria are that the financed equipment must be used at least 50% for business purposes.

Applying for a Loan: Process and Requirements

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To ensure a smooth application process, prepare the following documents:

  1. Driver’s license number
  2. Details of the equipment
  3. Business ABN
  4. Main business account details (account number and BSB)
  5. Banking statements for large loans to assess business health
  6. List of assets and liabilities
  7. Profit and loss statement

The thorough preparation of these documents can prevent delays and facilitate quicker loan approval.

Additional Considerations

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Loan Terms

Equipment and vehicle finance terms typically range from 12 to 84 months. For more expensive items with a longer

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Balloon Payments

A balloon or residual payment is a larger payment due at the end of the finance term. It allows for lower monthly payments during the loan term. However, setting a high balloon payment can result in a negative equity position if the final payment exceeds the asset’s market value at the end of the term.

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Choosing the Right Finance Option

Each finance option (loan, lease, or hire purchase) has unique benefits and conditions. Carefully consider your business’s financial needs, asset usage, and cash flow management when deciding.

Conclusion


Choosing the right vehicle and equipment finance is crucial for maintaining and growing your business. By understanding the types of financing available and evaluating your specific needs, you can make informed decisions that bolster your business’s capabilities without straining your resources. 

FAQs

Not sure? Have additional questions? Try here 

An equipment loan is a type of commercial finance used to purchase business equipment. It allows businesses to acquire the equipment they need without having to pay a large lump sum upfront, thus preserving their working capital and cash flow.

A: Various types of vehicles can be financed with an equipment loan, including commercial vehicles such as trucks, vans, and other specialized business vehicles. Different finance lenders may have specific criteria for the types of vehicle they will finance.

A finance broker acts as an intermediary between the business seeking finance and the commercial lender. The broker helps identify the most suitable finance solution based on the business’s specific needs and can assist with the application for finance, increasing the likelihood of approval and favourable terms.

Repayment terms for equipment loans can vary widely based on the type of asset, the lender’s requirements, and the needs of the business. Typical repayment periods range from 1 to 7 years. It’s essential to discuss the options with your finance broker to find the best repayment plan for your business.

Yes, equipment loans are often tax-deductible. The interest paid on an equipment loan can typically be deducted as a business expense, and the depreciation of the business equipment may also provide tax benefits. Businesses should consult a tax advisor to understand the specific tax advantages applicable to their situation.

Finance rates, or the interest rates on the loan, significantly impact the overall cost of commercial vehicle and equipment finance. Lower finance rates reduce the total amount paid over the life of the loan, so it is crucial to compare rates from various finance lenders and potentially work with a finance broker to secure the best rates.

The process for applying for a commercial equipment loan generally involves determining the equipment you need, preparing financial documents, selecting a lender or working with a broker, submitting an application for finance, and waiting for approval. The turnaround times for approval can vary based on the complexity of the loan and the responsiveness of the lender.

Yes, an equipment loan can be used to finance both new and used equipment. However, some commercial lenders may have specific criteria regarding the age, condition, and type of used equipment they are willing to finance. It’s essential to clarify these details with your lender or broker.

If a business cannot make the repayments on an equipment loan, the lender may take possession of the asset, as the lender owns the asset until the loan is fully repaid. This repossession can negatively impact the business’s credit rating and financial stability. It’s vital to communicate with the lender and possibly renegotiate terms if financial difficulties arise.

Asset finance lenders typically assess various factors to determine eligibility for an equipment loan, including the business’s credit history, cash flow, financial statements, and the value of the asset being financed. Working with a finance broker can help businesses prepare a strong application and improve their chances of approval.

Generally, any equipment that contributes to generating income for your business, including office equipment, vehicles for commercial use, engineering tools, medical and dental supplies, and more.

Consider factors like taxation and accounting practices. Consulting with your accountant can guide you toward the most beneficial financial option for your needs.

Thoroughly read all product documents to understand late payment fees, setup fees, and charges for early repayment. Be aware of any annual or recurring monthly fees.

Look at the interest rates, fees and charges, loan terms, any available tax benefits, and flexible repayment options to find the best fit for your financial situation.

Yes, to obtain vehicle or equipment finance, you must have valid insurance coverage that fully protects the asset. Financing is typically not available for uninsured equipment or vehicles.

Why not give us a call, or send us an email and get a direct response from one of our finance experts. We’d be happy to give you a hand and help point you in the right direction.

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